Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

Archive for May 4th, 2003

In his Sunday radio and TV address, President Chavez defined quite well his “new economy” when he said: ” The state does not pretend to monopolize foreign currency, but to compete with the private sector”. Now the rules are simple, the Government controls prices, does not give foreign currency to importers of anything, but it imports, at preferential rates, anything it wants and sells it at whatever price it wants. In fact, Chavez said that the Government is importing 1,300 Tons of chicken from Brazil. Now, the price of chicken is currently controlled at a level that producers lose money when they grow chickens, so it is cheaper to import them, but only if you can do it at the controlled rate and only the Government gets that. Chavez also said that the exchange control office has approved US$ 78 million to importers. It may be true, but the banking system has yet to hand out a single dollar to importers. Exchange controls were imposed over 100 days ago, so in any case $78 million is very little in a country that imported last year more than US$ 16 billion in goods.

The Venezuelan Central Bank made a very important discovery in its report on April’s inflation: Price controls don’t work! According to the Bank, despite price controls a number of items which are regulated increased in price or disappeared from the shelves.

Maybe they can publish it and win the Nobel prize in Economics, together with all of the economic authorities in Venezuela during the last forty years who imposed price controls and saw the same result. Politicians are indeed stupid, no?

Today’s El Nacional (can’t link to it, can’t read without subscription) has a very interesting article with Cuba’s most famous writer Guillermo Cabrera Infante. Cabrera, who backed the revolution the first few years, has some interesting thoughts on Cuba:

-On the Cubans shot to death for hijacking a ferry: The youngest one was 21. All of them were born during the Government of Fidel Castro. Were they candidates to become the “new man”? One also has to add they were all black.

-On the embargo: Castro can do business with 168 countries! There is only a commercial embargo with the United States

-On Castro: Castro is not communist. Castro is a castrist.

-On what a Cuban writer told an English reporter: I am afraid if Castro falls. They are going to drag me through the streets. My neighbors will. The hate me because I have a PC, a typewriter and a sattelite dish. On top of that Fidel visits me!

-On the European left and the myth of the Cuban revolution: They are stubborn because they deny the evidence. When one is wrong one has to recognize the error.